Supply chain bullying endemic against SME construction firms

Figures have been released this month that show a huge number of small and medium-sized supply firms are suffering due to late payments by construction companies.

Members of construction company representative organisation Build UK were questioned regarding the payment of supply chain invoices and the results have shown that large construction firms appear to have “utter disregard” for SMEs with invoices failing to be paid by agreed timescales.

Build UK members are expected to sign up to the Construction Supply Chain Payment Charter that sets a payment timeframe of 30 days for all supply chain invoices. However data shows that, despite the commitment of members, some of the UK’s largest construction firms are paying after 90 days or more. In fact 100% of the companies that reported said that they did not meet the 30 days agreement. The figures showed that one firm had failed to pay 83% of its invoices within agreed timescales and a further two had payment periods in excess of 60 days.

This is also backed up by a parliamentary report released last week that showed small firms are missing out of large contracts, even though larger firms are not delivering good value for money.

The National Federation of Builders has said that Build UK seem to be barely fulfilling its legal obligations. Simon Hanson from the Federation has said that poor payment practices seem to fun rampant throughout the industry and is a national disgrace as other nations appear to be able to pay the supply chain on time.

He points out that this puts small and medium-sized businesses at risk and forces owners to turn to credit cards and loans to survive. He suggests that late payments cost the economy £2.5bn annually, while 50,000 small businesses close their doors each year due to not being paid on time.